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Yahoo
10-07-2025
- Business
- Yahoo
CVS Omnicare ordered to pay $949 million in government fraud case
This story was originally published on Healthcare Dive. To receive daily news and insights, subscribe to our free daily Healthcare Dive newsletter. A federal judge has ordered CVS to pay $948.8 million in penalties and damages in a whistleblower case alleging that the company's Omnicare division illegally charged the U.S. government for prescription drugs. Manhattan Judge Colleen McMahon imposed a $542 million penalty for what she called 'very big fraud' in her Monday order, and awarded $406.8 million in damages — three times the $135.6 million that a jury awarded in the spring, as required under the False Claims Act. Omnicare filed more than 3.3 million false claims between 2010 and 2018, according to court documents. CVS, which acquired the pharmacy benefits manager in 2015, denied the allegations and said it planned to appeal McMahon's decision. A former Omnicare pharmacist filed the lawsuit in 2015 accusing the PBM of improperly billing Medicare, Medicaid and the military's Tricare program for over $135 million in drugs that weren't actually covered by the programs. Omnicare — the largest long-term care pharmacy services provider in the U.S. — fraudulently dispensed drugs to elderly and disabled people in long-term care and assisted living facilities without valid prescriptions, according to the complaint. The Department of Justice joined the suit in 2019, and a jury ruled in favor of the government last spring. The False Claims Act allows whistleblowers to bring complaints on the government's behalf and share in potential damages. The law is a key weapon in the government's arsenal for combating fraud, and the driving force behind a major share of healthcare recoveries. The law requires tripling of damages, a stipulation that inflated CVS' penalty. The company argued that the $948.8 million award violates the Constitution's prohibition against excessive fines, but McMahon did not agree. 'Admittedly [the fine] is a very big number. But this was a very big fraud on the Government, one that lasted over almost a decade, and one that Omnicare was aware of but avoided taking steps to correct,' the judge wrote. And CVS is getting off relatively easy, McMahon noted. According to her order, following the letter of the FCA, which outlines a minimum penalty of $5,000 for every false claim, would result in an 'astronomical' minimum penalty of $26.9 billion on top of the damages. Still, CVS plans to appeal the judgment. 'This lawsuit centered on a highly technical prescription dispensing record keeping issue that was allowed by law in many states. The dispensing practices referenced were limited to Omnicare, ended in 2018, were used by many others in the industry at the time, and were accepted by CMS,' a spokesperson for the company said. 'There was no claim in this case that any patient paid for a medication they shouldn't have or that any patient was harmed. The decision on penalties is unconstitutional, especially given the fact that there is no evidence that a single patient suffered harm,' they added. If the healthcare juggernaut's appeal fails, the penalty is small hit in comparison to its annual revenue, which reached $372.8 billion in 2024. Still, it would mean a financial speedbump for CVS, which is struggling to adjust to reimbursement pressures in its legacy retail pharmacy business and higher medical costs for members in its Aetna health plans. Recommended Reading DOJ charges more than 300 in $14.6B healthcare fraud bust
Boston Globe
10-07-2025
- Business
- Boston Globe
CVS ordered to pay $949m over invalid prescriptions in federal lawsuit
Omnicare specializes in providing services to assisted-living communities, nursing homes, and other long-term care settings. The acquisition was CVS's attempt to broaden its presence in the specialty pharmacy business as it sought to capitalize on an aging population. Omnicare is now the largest long-term care pharmacy services provider in the country. Get Rhode Map A weekday briefing from veteran Rhode Island reporters, focused on the things that matter most in the Ocean State. Enter Email Sign Up Uri Bassan, a former Omnicare pharmacist in Albuquerque, N.M., first filed the suit in 2015. The US Department of Justice joined the suit in 2019. Both parties accused Omnicare of improperly billing Medicare, Medicaid, and Tricare prescriptions for patients in assisted-living communities, group homes, and other long-term care facilities without valid prescriptions. Advertisement CVS plans to appeal. 'This lawsuit centered on a highly technical prescription dispensing record keeping issue that was allowed by law in many states,' said Ethan Slavin, a spokesman for CVS, in a statement to the Globe on Thursday. 'The dispensing practices referenced were limited to Omnicare, ended in 2018, were used by many others in the industry at the time.' Slavin said the practices were accepted by the federal Centers for Medicare & Medicaid Services. Advertisement Slavin said there was no claim in the case that 'any patient paid for a medication they shouldn't have or that any patient was harmed.' A jury 'False claims in the healthcare industry cost every American,' said US Attorney Jay Clayton The False Claims Act allows whistleblowers to bring complaints on the federal government's behalf. The law is key for the government to combat fraud. The law requires tripling of damages, which inflated CVS' penalty. But the company argues the award violates the Constitution's barring of excessive fines. 'The decision on penalties is unconstitutional, especially given the fact that there is no evidence that a single patient suffered harm,' said Slavin. 'We plan to appeal once the judgment is entered.' In 2024, CVS Health reported McMahon wrote in her order that while the fine 'is a very big number,' this 'was a very big fraud on the government, one that lasted over almost a decade, and that Omnicare was aware of but avoided taking steps to correct.' Alexa Gagosz can be reached at
Reuters
08-07-2025
- Health
- Reuters
Judge orders CVS' Omnicare unit to pay $949 million over invalid prescriptions
NEW YORK, July 8 (Reuters) - A federal judge ordered CVS Health's (CVS.N), opens new tab Omnicare unit to pay $948.8 million in penalties and damages, in a whistleblower lawsuit claiming it fraudulently billed the U.S. government for invalid drug prescriptions. In a Monday evening order, U.S. District Judge Colleen McMahon in Manhattan imposed a $542-million penalty for filing 3,342,032 false claims between 2010 and 2018. McMahon also awarded $406.8 million of damages, representing three times the $135.6 million that a jury awarded on April 29. The tripling was required under the federal False Claims Act, which lets whistleblowers sue on behalf of the federal government and share in recoveries. CVS plans to appeal the judgment. The Woonsocket, Rhode Island-based drugstore chain and pharmacy benefits manager bought Omnicare in 2015. Omnicare has asked McMahon to throw out the case or grant a new trial. "This lawsuit centered on a highly technical prescription dispensing recordkeeping issue that was allowed by law in many states," CVS said in a statement on Tuesday. "There was no claim in this case that any patient paid for a medication they shouldn't have or that any patient was harmed." The lawsuit was filed in 2015 by Uri Bassan, a former Omnicare pharmacist in Albuquerque, New Mexico, and joined by the federal government in 2019. They said Omnicare improperly billed Medicare, Medicaid, and Tricare, which serves military personnel, for prescriptions for tens of thousands of patients in assisted-living facilities, group homes for people with special needs, and other long-term care facilities. Omnicare allegedly assigned new prescription numbers without necessary paperwork and pharmacist approvals, after the original prescriptions expired or ran out of refills. McMahon rejected CVS' argument that a $948.8-million award violated the U.S. Constitution's prohibition against excessive fines under the Eighth Amendment. "This was a very big fraud on the government, one that lasted over almost a decade, and one that Omnicare was aware of but avoided taking steps to correct," the judge wrote. McMahon found CVS jointly liable with Omnicare for $164.8 million of the penalties, after jurors found it failed to stop Omnicare from submitting 30% of the false claims after buying that company. CVS itself did not submit any claims. The case is U.S. ex rel Bassan v. Omnicare Inc, U.S. District Court, Southern District of New York, No. 15-04179.
Business Mayor
03-05-2025
- Business
- Business Mayor
CVS tops estimates, hikes guidance as insurance business shows some improvement
CVS Pharmacy logo is seen in Washington DC, United States on July 9, 2024. Jakub Porzycki | Nurphoto | Getty Images CVS Health on Thursday reported first-quarter earnings and revenue that topped estimates and hiked its guidance, as its troubled insurance business showed some improvement during the period. Shares of CVS closed 4% higher Thursday. The company now expects full-year adjusted earnings of $6 to $6.20 per share, up from a previous guidance of $5.75 to $6 per share. But the company revised its GAAP diluted EPS guidance to be lower, which includes charges related to a legal battle involving its pharmacy services provider subsidiary, Omnicare. A jury this week found Omnicare liable for dispensing drugs without valid prescriptions to elderly and disabled individuals in assisted living and long-term care facilities. CVS plans to appeal. The company did not provide a revenue forecast for the year. CVS said it is 'maintaining a cautious view for the remainder of the year' in light of continued higher medical costs and 'the potential for macro headwinds.' 'We got smarter about the markets that we wanted and the lives that we wanted to compete for, and so we actually have planned and budgeted for the elevated trends,' CVS CEO David Joyner said in an interview with CNBC, referring to markets that the insurance unit operates in and higher medical costs 'So I think why you're not seeing a surprise on our part is because we actually plan for elevated trends going into this year,' he added. Joyner said the company is watching for the potential impact from President Donald Trump's planned tariffs on pharmaceuticals imported into the U.S. Read More A subtype of depression identified 'On the pharmacy side, I think it is highly dependent on what happens in the next week or two when they announce the implications of tariffs on the manufacturers,' he told CNBC. Joyner added that the vast majority of the company's retail products at the front of stores are sourced in the U.S., 'which should be a benefit for us.' Here's what CVS reported for the first quarter compared with what Wall Street was expecting, based on a survey of analysts by LSEG: Earnings per share: $2.25 per share adjusted vs. $1.70 per share expected $2.25 per share adjusted vs. $1.70 per share expected Revenue: $94.59 billion vs. $93.64 billion expected The company's insurer, Aetna, and its rivals have been dogged by higher-than-expected medical costs over the last year as more Medicare Advantage patients return to hospitals for procedures they delayed during the pandemic. But for the first time in several quarters, CVS' insurance business appeared to show some signs of improvement. The unit's medical benefit ratio — a measure of total medical expenses paid relative to premiums collected — decreased to 87.3% from 90.4% a year earlier. A lower ratio typically indicates that a company collected more in premiums than it paid out in benefits, resulting in higher profitability. CVS said the move partly reflects stronger underlying performance in its Medicare business and improved Medicare Advantage star ratings for the 2025 payment year. Those ratings help patients compare the quality of Medicare health and drug plans. 'I think that investment and talent that allowed us to focus on both the execution and the operation … actually helped establish the performance that you're seeing,' Joyner said, referring to an executive reshuffling last year that tapped a new leader for the insurance unit and other parts of the business. Read More US reports first case of emerging mpox strain The results cap off the second full quarter with Joyner, a longtime CVS executive, as chief executive of the retail drugstore chain. Joyner succeeded Karen Lynch in mid-October, as CVS struggled to drive higher profits and improve its stock performance. The company underwent a management reshuffle as part of a broader turnaround plan that includes $2 billion in cost cuts over the next several years. Still, CVS' performance was partially offset by a charge of $431 million from so-called premium deficiency reserves in the insurance unit, which is related to anticipated losses in the 2025 coverage year. That refers to a liability that an insurer may need to cover if future premiums are not enough to pay for anticipated claims and expenses. The company posted net income of $1.78 billion, or $1.41 per share, for the first quarter. That compares with net income of $1.12 billion, or 88 cents per share, for the year-earlier period. Excluding certain items, such as amortization of intangible assets, restructuring charges and capital losses, adjusted earnings were $2.25 per share for the quarter. CVS booked sales of $94.59 billion for the first quarter, up 7% from the same period a year ago due to growth across all three of its business segments. But sales in the company's retail pharmacy segment missed Wall Street's expectations for the quarter, according to StreetAccount. That business has been pressured by softer consumer spending and lower reimbursements for prescription drugs. CVS' insurance business booked $34.81 billion in revenue during the quarter, up 8% from the first quarter of 2024. Analysts expected the unit to take in $33.51 billion for the period, according to estimates from StreetAccount. Read More HRT: Sharp rise in prescriptions after menopause campaign The unit also recorded adjusted operating income of $1.99 billion for the first quarter, compared with $732 million for the year-earlier period. Also on Thursday, CVS said Aetna will stop offering health insurance plans on the Affordable Care Act marketplaces — also known as individual exchanges — starting in the 2026 plan year.
Yahoo
01-05-2025
- Business
- Yahoo
CVS strikes a deal to offer Wegovy at a discount
Customers at CVS will be able to buy weight loss drug Wegovy at a discount. Cash purchasers can get the Novo Nordisk–made product for $499 per month. The pharma company has also recently struck deals with major telehealth companies. CVS and Novo Nordisk have struck a deal that will see the drugstore chain offering the Wegovy weight-loss drug to customers at a discount. Approximately 9,000 CVS locations will begin selling Wegovy for $499 per month to customers who pay cash out of pocket. That's the same rate Novo Nordisk has offered previously through its online pharmacy. Novo Nordisk has been looking for ways to expand its market share lately. It also recently aligned itself with telehealth companies Hims & Hers, Ro, and LifeMD to sell Wegovy at a discount for cash customers. "As the leader in obesity care for more than a decade, it is our responsibility to continue to work with others across the U.S. health care system to find innovative opportunities to meet the needs of these patients and connect them with…Wegovy in a convenient and affordable way," Dave Moore, president of Novo Nordisk, said in a statement. Wegovy trails Ozempic in market share. Both drugs are made by Novo Nordisk. The announcement comes as CVS exceeded analyst expectations in its first-quarter earnings. The company reported earnings per share of $2.25, versus a projected $1.70. Those numbers, however, did not include charges tied to a recent jury verdict against the company's Omnicare program, which found the unit has filed false claims with Medicare, Medicaid, and Tricare, resulting in damages of over $135.5 million. The company also raised its 2025 guidance to a range of $6 to $6.20 in earnings per share, up from $5.75 to $6. This story was originally featured on Sign in to access your portfolio
